Clean Energy for the Future?
Paul is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
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Astrum Solar (Energy)
Founded – 2007 Industry Rank – #1 in Baltimore 3- year growth – 23.577% Revenue 2008 – $113,660 Revenue 2011 – $26.9 million Employees – 170
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We have heard a lot of talk about the future of energy sources, focused mainly on the pros and cons of fossil fuel as opposed to clean fuels. Preference for cleaner fuel has been strengthened by the advent of the ominous greenhouse gas cloud and the dread of increasing temperatures, melting polar ice caps and accompanying rise in sea levels. The likelihood of these events happening has led to the corresponding emergence of clean energy companies alongside the traditional fossil fuel distributors.
Of the 5000 top companies in United there are 103 companies engaged in the production of clean energy. One of these companies is Astrum Solar and we shall refer to its status and operations, but before doing so, it is important to point out that of the 103 companies, the first ten were founded between 2004 and 2008. A random selection down to the very bottom ranking company reveals that the earliest company, Chaparral Energy was founded in 1988 and the last ranked, Energy Design Service System, was founded in 2007. Given these randomly selected figures, we can deduce that clean energy generation has been around in the US for a mere 24 years; clearly a very young industry with plenty of room to grow. Let us now turn to our first ‘clean energy’ companies.
Astrum Solar provides solar power to homes and businesses. It does so through six centers in a dozen states and understandably, it works is underscored by the ideal of a ‘total solar’ experience for its customers. It implements this idea by participating directly in the design, installation and monitoring stages of each individual project. It also places a lot of importance on the benefits that accrue from the use of solar power as opposed to the conventional generation of electricity. We have the opportunity of studying these as set out below:
The company says that a watt-hour use of electricity provided by solar panels, represents one less watt-hour of electricity generated by conventional means, meaning that it is cheaper to be provided with electricity from solar panels that from a utility company.
The company points out that savings from the use of solar power increases over time citing the example of an average size solar installation of 5kw will generate accumulated savings of $40,000 over a period of 20 years. What’s more, it’s an all round win-win situation whether a potential user leases a unit or pays outright for it. The rationale here is that with leasing the cost would be so negligible as to sometimes cost nothing because savings would be made immediately from not having to pay the usual heavy electricity bill. With ownership, the situation is even better as the return on investment tends to register a double digit, when compared to other investment opportunities.
The company claims that the use of solar panels increases the value of homes. To substantiate its claim, it says that a potential buyer of your renovated home is always subjective and often will not agree with how the renovation has been done (wallpaper instead of timber). In the case of an installed solar unit, the value is objective simply because it reduces electric bill and for the current as well as a future owner.
A lot of other advantages have been attributed to the use of solar panels in the home including rapid sale potential, long run investment potential, state reimbursements and tax rebates.
Analysis:
Alright, so there is a lot of potential for installing solar panels in the home. But what about investing in these clean energy companies? Do they provide a good opportunity to invest? Well, the answer is, they certainly do! Why?
Because they are new and are preferred industries due to prevailing circumstance e.g. greenhouse gases emissions.
There is a lot of room for expansion and growth.
Their products attract consumers’ demand
Government is tending towards green clean fuel.
Astrum Solar provides clear and affirmative data for investing in clean energy. It was founded in 2007, only four years ago and a year later it earned $113,669. Three years later in 2011, its earnings rose to $26.9 million experiencing an overall growth of 23.577% over the same period.
The best of the big company earners Renewable Energy Group also provide supportive data for investing. It deals in producing soybean oil as diesel and was founded in 2002. In 2003 its earnings rose to $15.2 million. In 2006 its earnings had risen to $178 million and in 2012, it was a whopping $824 million.
This trend is likely to repeat itself with the other new clean energy companies
The overall direction points to overall growth in the market for clean energy.
All the above suggest that the clean energy market is a safe market to invest in but you need to make your own decision. Personally, in terms of a high on ROI, I would invest in the established companies like Renewable Energy Group and Advanced Bio-Energy. Alternatively, I would look for and invest in clean energy companies that are recent start-ups and have potential to grow. I would watch for companies like Astrum Solar that are new, dynamic and have proven themselves to be top notch performers.
Well on the way of becoming an ivestor
